In many cases, the end of the year gives you time to step back and take stock of the last 12 months. This is when many of us take a hard look at what worked and what did not, complete performance reviews, and formulate plans for the coming year. For me, it is all of those things plus a time when I u...

“Looking forward, we have built a good foundation for future growth by
charting a new course that has the buy-in of our customers and our
employees,” said Gregg Lowe, president and CEO. “We've assembled a
strong management team that is committed to helping deliver long-term
growth and profitability.”

Fourth Quarter and Calendar Year 2012 Highlights

Net sales for the fourth quarter of 2012 were $957 million, compared to
$1.01 billion in the third quarter of 2012 and $1.01 billion in the
fourth quarter of 2011. Net sales for calendar year 2012 were $3.95
billion compared to $4.57 billion in calendar year 2011.

Income from operations for the three months ended December 31, 2012 was
$56 million, compared to $127 million in the third quarter of 2012 and
$136 million in the fourth quarter of 2011. Income from operations for
calendar year 2012 was $463 million compared to income of $274 million
in calendar year 2011.

The net loss for the fourth quarter 2012 was $35 million, or $.14 per
share, compared to a loss of $24 million, or $.10 per share, in the
third quarter of 2012 and a loss of $6 million, or $.02 per share, in
the same period last year. The net loss for calendar year 2012 was $102
million or $.41 per share, compared to a loss of $410 million, or $1.82
per share, in calendar year 2011.

Adjusted operating earnings (defined in Note 1 to the Notes to the
Consolidated Financial Information attached to this press release) for
the three months ended December 31, 2012 were $79 million compared to
earnings of $127 million in the third quarter of 2012 and $144 million
in the fourth quarter of 2011. Adjusted operating earnings for calendar
year 2012 were $461 million compared to $761 million in calendar year
2011.

The adjusted net loss (defined in Note 1 to the Consolidated Financial
Information attached to this press release) for the three months ended
December 31, 2012 was $37 million, or $.15 per share, compared to
earnings of $10 million, or $.04 per share, in the third quarter of 2012
and earnings of $18 million, or $.07 per share, in the fourth quarter of
2011. The adjusted net loss for calendar year 2012 was $19 million, or
$.08 per share, compared to adjusted net earnings of $217 million, or
$.96 per share in calendar year 2011.

Descriptions of EBITDA, Adjusted EBITDA, adjusted operating earnings and
adjusted net earnings (loss) and the reconciliations to our GAAP results
are included in the tables and notes attached to this press release.

Product Group Revenues

Following a strategic review completed during the third quarter of 2012,
the company realigned its product groups and, effective with the fourth
quarter of 2012, the company will report net sales based on the
following product groups: Microcontrollers, Digital Networking,
Automotive Microcontrollers, Analog & Sensors, RF and Other.

The company’s net sales figures for the fourth quarter and calendar year
2012 were as follows:

Microcontroller net sales, which includes sales for industrial,
multi-market, smart energy, healthcare and multimedia applications
were $197 million in the fourth quarter, compared to $192 million in
the third quarter of 2012 and $172 million in fourth quarter last
year. For the year, net sales were $707 million compared to $790
million in 2011.

Digital Networking net sales, which includes sales of communications
and digital signal processors sold to the networking and
communications markets, were $195 million, compared to $226 million in
the third quarter of 2012 and $209 million in fourth quarter last
year. For the year, net sales were $852 million compared to $928
million in 2011.

Automotive Microcontroller net sales, which includes microcontroller
sales to the global automotive market, were $236 million, compared to
$252 million in the third quarter of 2012 and $253 million in fourth
quarter last year. For the year, net sales were $986 million compared
to $1.07 billion in 2011.

Analog & Sensor net sales, which includes sales of automotive analog,
mixed signal analog and sensor products to the automotive and consumer
markets, were $175 million, compared to $180 million in the third
quarter of 2012 and $191 million in fourth quarter last year. For the
year, net sales were $722 million compared to $785 million in 2011.

RF net sales, which includes sales of power amplifiers to the wireless
infrastructure market, were $97 million, compared to $73 million in
the third quarter of 2012 and $101 million in fourth quarter last
year. For the year, net sales were $303 million compared to $418
million in 2011.

Other net sales, which includes primarily IP licensing revenue and
wireless handset sales, were $57 million compared to $86 million in
the third quarter of 2012 and $87 million in fourth quarter last year.
For the year, net sales were $375 million compared to $579 million in
2011.

Other Financial Information

Capital Expenditures were $38 million in the fourth quarter and $123
million for calendar year 2012;

*Adjusted for various items as indicated and defined in Note 1 to the
Notes to the Consolidated Financial Information attached to this press
release.

First Quarter 2013 Outlook

For the first quarter of 2013, the company expects:

Net sales to be between $945 million and $985 million;

Gross margins to increase approximately 75 to 100 basis points on a
sequential basis.

Conference Call and Webcast

Freescale's quarterly earnings call is scheduled to begin at 4:00 p.m.
Central Time on January 29, 2013. The company will offer a live webcast
of the conference call over the Internet at www.freescale.com/investor.

Caution Regarding Forward-Looking Statements

This press release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements relate to our business strategy, goals and expectations
concerning our strategic direction, key personnel, future operations,
margins, profitability, liquidity and capital resources. Although we
believe the assumptions upon which these forward-looking statements are
based are reasonable, any of these assumptions could prove to be
inaccurate and the forward-looking statements based on these assumptions
could be incorrect. Our operations involve risks and uncertainties, many
of which are outside our control, and any one of which, or a combination
of which, could materially affect our results of operations and whether
the forward-looking statements ultimately prove to be correct. Actual
results and trends in the future may differ materially from those
suggested or implied by the forward-looking statements depending on a
variety of factors. Some of the factors that we believe could affect our
results include our substantial indebtedness; our ability to service our
outstanding indebtedness and the impact such indebtedness may have on
the way we operate our business; the loss of one or more of our
significant customers or strategic relationships; general economic and
business conditions and any downturns in the cyclical industry in which
we operate; our competitive environment and our ability to make
technological advances; interruptions in our production or manufacturing
capacity and our ability to obtain supplies; economic conditions in the
industries in which our products are sold; maintenance and protection of
our intellectual property; political and economic conditions in the
countries where we conduct business; geological conditions in some of
the earthquake-prone countries where certain of our customers and
suppliers are based; the costs of environmental compliance and/or the
imposition of liabilities under environmental laws and regulations;
potential product liability or personal injury claims; inability to make
necessary capital expenditures; loss of key personnel; the financial
viability of our customers, distributors or suppliers; and our ability
to achieve cost savings as well as other matters described under
"Risk Factors" in our Annual Report on Form 10-K and other filings with
the SEC. We undertake no obligation to update any information contained
in this press release.

Non-GAAP Financial Measures

Included within this press release and the accompanying tables and notes
are non-GAAP financial measures that supplement the company's
consolidated financial information prepared under GAAP. The company
describes these non-GAAP financial measures and reconciles them to the
most directly comparable GAAP measures in the tables and notes attached
to this press release. The company's management believes that these
non-GAAP measures provide a more meaningful representation of the
company’s ongoing financial performance than GAAP measures alone. In
addition, the company uses Adjusted EBITDA to measure compliance with
certain of its debt covenants. These non-GAAP measures are included
solely for informational and comparative purposes and are not meant as a
substitute for GAAP. You should consider them together with the
consolidated financial information located in the tables attached to
this press release.

About Freescale Semiconductor

Freescale Semiconductor is a global leader in embedded processing
solutions, providing industry leading products that are advancing the
automotive, consumer, industrial and networking markets. From
microprocessors and microcontrollers to sensors, analog integrated
circuits and connectivity - our technologies are the foundation for the
innovations that make our world greener, safer, healthier and more
connected. Some of our key applications and end-markets include
automotive safety, hybrid and all-electric vehicles, next generation
wireless infrastructure, smart energy management, portable medical
devices, consumer appliances and smart mobile devices.

The company is based in Austin, Texas, and has design, research and
development, manufacturing and sales operations around the world. http://www.freescale.com

(6) Other includes licensing and sales of intellectual property, sales
serving the wireless handset market, sales of wafers to other
semiconductor companies and other miscellaneous items.

Freescale Semiconductor, Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)

Dec 31,

Sept 28,

Dec 31,

2012

2012

2011

ASSETS

Cash and cash equivalents

$

711

$

763

$

772

Accounts receivable, net

384

440

459

Inventory, net

797

810

803

Other current assets

166

182

198

Total current assets

2,058

2,195

2,232

Property, plant and equipment, net

715

723

772

Intangible assets, net

64

77

84

Other assets, net

334

334

327

Total assets

$

3,171

$

3,329

$

3,415

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current portion of long-term debt and capital lease obligations

$

6

$

7

$

2

Accounts payable

323

371

347

Accrued liabilities and other

543

512

451

Total current liabilities

872

890

800

Long-term debt

6,375

6,476

6,589

Other liabilities

455

452

506

Shareholders' deficit

(4,531

)

(4,489

)

(4,480

)

Total liabilities and shareholders' deficit

$

3,171

$

3,329

$

3,415

Freescale Semiconductor, Ltd.

Cash Flow Summary

(Unaudited)

Three Months Ended

Twelve Months Ended

(in millions)

Dec 31,

Sept 28,

Dec 31,

Dec 31,

Dec 31,

2012

2012

2011

2012

2011

Cash flows from operations

$

82

$

16

$

48

$

350

$

99

Cash flows from investing activities

$

(33

)

$

(47

)

$

(17

)

$

(176

)

$

(89

)

Cash flows from financing activities

$

(100

)

$

(91

)

$

(1

)

$

(232

)

$

(290

)

Effect of exchange rate changes on cash and cash equivalents

$

(1

)

$

4

$

(2

)

$

(3

)

$

9

Freescale Semiconductor, Ltd.

EBITDA and Adjusted EBITDA Reconciliations

(Unaudited)

Three Months Ended

Twelve Months Ended

(in millions)

Dec 31,

Sept 28,

Dec 31,

Dec 31,

Dec 31,

2012

2012

2011

2012

2011

EBITDA excluding the effects of other items

$

140

$

186

$

216

$

701

$

1,066

Fair value adjustment on interest rate and commodity derivatives (c)

-

7

-

17

-

Loss on extinguishment or modification of long-term debt, net (e)

1

3

-

32

97

Reorganization of business and other (f)

20

(3

)

(68

)

(15

)

82

EBITDA

119

179

284

667

887

Depreciation

45

44

83

179

393

Amortization*

19

20

63

78

313

Interest expense, net

127

125

133

510

563

Income tax (benefit) expense

(37

)

14

11

2

28

Net loss

$

(35

)

$

(24

)

$

(6

)

$

(102

)

$

(410

)

Twelve Months EndedDec 31, 2012

(in millions)

Net loss

$

(102

)

Interest expense, net

510

Income tax expense

2

Depreciation and amortization expense*

257

Non-cash share-based compensation expense (b)

43

Fair value adjustment on interest rate and commodity derivatives (c)

17

Loss on extinguishment or modification of long-term debt, net (e)

32

Reorganization of business and other (f)

(15

)

Cost savings (g)

78

Other terms (h)

17

Adjusted EBITDA

$

839

*Excludes amortization of debt issuance costs, which are included in
interest expense, net.

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

Summary of Key Reconciling Items

(a) Includes the effects of purchase price accounting relating to our
acquisition by a consortium of investors in 2006 and our acquisition of
SigmaTel, Inc. in 2008, including, as applicable, depreciation expense
associated with the property, plant and equipment step up to fair value
and amortization expense for acquired intangible assets related to
developed technology and tradenames/trademarks.

(f) Reflects items related to our reorganization of business programs
and other charges.

(g) Reflects costs savings that we expect to achieve from initiatives
commenced prior to December 31, 2009 under our reorganization of
business programs that are in process or have already been completed.

(i) Includes the acceleration of depreciation relating to the closure of
certain of our 150mm manufacturing facilities.

Note 1

Adjusted gross margin and adjusted operating earnings (loss) represent
gross margin and operating earnings (loss) adjusted for the following as
necessary: incremental depreciation expense for property, plant and
equipment fair value step-up and associated with reduction in lives of
certain manufacturing assets, amortization of acquired intangible
assets, and reorganization of businesses and other charges. Adjusted
gross margin and adjusted operating earnings (loss) are not recognized
terms under U.S. GAAP. Adjusted gross margin and adjusted operating
earnings (loss) do not represent gross margin and operating earnings
(loss), as those terms are defined under U.S. GAAP, and should not be
considered as alternatives to gross margin or operating earnings (loss)
as an indicator of our operating performance. We have included
information concerning adjusted gross margin and adjusted operating
earnings (loss) because we use such information when evaluating gross
margin and operating earnings (loss) to better evaluate the underlying
performance of the Company. Adjusted gross margin and adjusted operating
earnings (loss) as presented herein are not necessarily comparable to
similarly titled measures. A reconciliation of adjusted gross margin to
gross margin and adjusted operating earnings (loss) to operating
earnings (loss), the most directly comparable U.S. GAAP measures, has
been included in the preceding tables.

Adjusted net earnings (loss) is net earnings (loss), adjusted for
certain items that we believe are not indicative of the performance of
our ongoing operations. We present adjusted net earnings (loss) as a
supplemental performance measure. We believe adjusted net earnings
(loss) is helpful to an understanding of our business and provides a
means of evaluating our performance from period to period on a more
consistent basis. This presentation should not be construed as an
indication that similar items will not recur or that our future results
will be unaffected by other items that we consider to be outside the
ordinary course of our business. Because adjusted net earnings (loss)
facilitates internal comparisons of our historical financial position
and operating performance on a more consistent basis, we also use
adjusted net earnings (loss) for business planning purposes, in
measuring our performance relative to that of our competitors and in
evaluating the effectiveness of our operational strategies. Adjusted net
earnings (loss) has limitations as an analytical tool, and you should
not consider it in isolation or as a substitute for an analysis of our
results as reported under U.S. GAAP. We compensate for these limitations
by relying primarily on our U.S. GAAP results and using adjusted net
earnings (loss) only supplementally. A reconciliation of adjusted net
earnings (loss) to net earnings (loss), the most directly comparable
U.S. GAAP performance measure, has been included in the preceding tables.

EBITDA (earnings before interest, taxes, depreciation and amortization)
excluding the effects of other items is a non-U.S. GAAP financial
measure. We have included information concerning EBITDA excluding the
effects of other items because we use such information to supplementally
evaluate the underlying performance of the Company. EBITDA excluding the
effects of other items does not represent, and should not be considered
an alternative to, net earnings (loss), operating earnings (loss), or
cash flow from operations as those terms are defined by U.S. GAAP and
does not necessarily indicate whether cash flows will be sufficient to
fund cash needs. While EBITDA excluding the effects of other items and
similar measures are frequently used as measures of operations and the
ability to meet debt service requirements by other companies, our use of
this financial measure is not necessarily comparable to such other
similarly titled captions of other companies.

Adjusted EBITDA as shown in the preceding tables is calculated in
accordance with the agreement and indentures governing Freescale
Semiconductor, Inc.’s existing notes and senior credit facilities.
Adjusted EBITDA is net earnings (loss) adjusted for certain non-cash and
other items that are included in net earnings (loss). The ability of our
subsidiaries to engage in activities such as incurring additional
indebtedness, making investments and paying dividends is tied to ratios
under the indentures and the senior credit facilities based on Adjusted
EBITDA calculated for the most recent four fiscal quarters. Accordingly,
we believe it is useful to provide the calculation of Adjusted EBITDA to
investors for purposes of determining our ability to engage in these
activities. Adjusted EBITDA is a non-U.S. GAAP financial measure.
Adjusted EBITDA does not represent, and should not be considered an
alternative to, net earnings (loss), operating earnings (loss), or cash
flow from operations as those terms are defined by U.S. GAAP and does
not necessarily indicate whether cash flows will be sufficient to fund
cash needs. Although Adjusted EBITDA and similar measures are frequently
used as measures of operations and the ability to meet debt service
requirements by other companies, our calculation of Adjusted EBITDA is
not necessarily comparable to such other similarly titled captions of
other companies. The calculation of Adjusted EBITDA in the indentures
and the senior credit facilities allows us to add back certain charges
that are deducted in calculating net earnings (loss). However, some of
these expenses may recur, vary greatly and are difficult to predict.
Further, our debt instruments require that Adjusted EBITDA be calculated
for the most recent four fiscal quarters. We do not report Adjusted
EBITDA on a quarterly basis. In addition, the measure can be
disproportionately affected by quarterly fluctuations in our operating
results, and it may not be comparable to the measure for any subsequent
quarter, four-quarter period or any complete fiscal year. A
reconciliation of net earnings (loss), which is a U.S. GAAP measure of
our operating results, to Adjusted EBITDA, calculated as described
above, has been included in the preceding tables.

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